Bitcoin Moving With Stocks, But Ethereum’s Correlation Is Fading

Keshav Verma

2 hours ago

3 mins read

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Bitcoin has been showing notable correlation to the stock equities recently, but data shows Ethereum is charting a more independent path.

Bitcoin & Ethereum Showing Different Degrees Of Correlation To Other Assets

In a post on X, the institutional DeFi solutions provider Sentora (previously IntoTheBlock) has talked about how the latest Correlation Matrix has looked between the two largest cryptocurrencies, Bitcoin and Ethereum, and traditional markets. The “Correlation Matrix” here refers to an indicator that tells us how closely tied together the prices of two given assets currently are.

When the value of this metric is positive, it means the assets are reacting to moves in each other by moving in the same direction to some degree. The closer the metric is to 1, the stronger the relationship.

On the other hand, the indicator being under the zero mark implies there is a negative correlation between the two prices. That is, they are moving in opposite directions. For this side of the scale, the extreme point is -1.

Naturally, the Correlation Matrix showing a value exactly equal to zero suggests there is no correlation whatsoever between the assets. In statistics, the two variables are said to be ‘independent’ in this case.

Now, here is the table shared by Sentora that shows how the Correlation Matrix of Bitcoin and Ethereum stands with respect to some traditional markets:

Bitcoin Correlation Matrix — Looks like BTC is showing a strong negative correlation to the VIX Index | Source: Sentora on X

As is visible above, the index that Bitcoin and Ethereum have the strongest positive correlation to is DAX. That said, the Correlation Matrix stands at 0.46 for ETH, meaning that while some correlation does exist, it’s not too intense. This isn’t the case for Bitcoin, which has the indicator sitting at 0.85, indicating its price is pretty in tandem with DAX.

Likewise, BTC has a notable correlation to other stock market indices, with a metric value of 0.7, 0.68, and 0.69 for the Russel 2000, S&P 500, and Dow Jones Industrial Average, respectively. In contrast, Ethereum is almost fully independent from these indices, with the indicator standing quite close to zero for each of them.

For US Dollar Index and VIX Index, the last two markets listed in the table, the Correlation Matrix is inside the negative zone for Bitcoin. This means that the digital asset has actively been moving against these indices.

“Right now, the spotlight is on the U.S. Dollar Index (DXY): if geopolitical and macro tensions drag the dollar lower, that backdrop could create room for another leg higher in BTC,” notes the analytics firm.

Just like with the stocks, Ethereum is displaying little correlation to DXY and VIX, further reinforcing that the cryptocurrency has been following a trajectory of its own recently.

BTC Price

Bitcoin is mounting another bullish push as its price surges to $109,400, but it remains to be seen whether its fate will be any different from the weekend move.

Bitcoin Price Chart — The trend in the BTC price over the last five days | Source: BTCUSDT on TradingView

Featured image from Dall-E, IntoTheBlock.com, chart from TradingView.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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